As a sweetener, Daniel Ek’s company was offering to pay investors 4% interest on this money, in addition to promising funders that they would receive a further 17.5% discount on Spotify shares after (and if) it executed a successful IPO within a year.

The good news for Ek (pictured): his team have managed to raise double the money they were initially going for.

The not so good news: they’ve had to adjust their terms more favourably for investors to secure it.

According to the Wall Street Journal, Spotify has raised the new round of $1bn from a combination of private equity giant TPG, hedge fund Dragoneer Investment Group and clients of Goldman Sachs.

If Spotify executes its IPO within the next year, say the WSJ’s sources, TPG and Dragoneer will be able to convert their debt at a 20% discount.

Spotify will also pay 5% interest on the debt – a figure which will rise 1% every six months until it goes public, or until it maxes out at 10%.

TPG and Dragoneer have contributed $750m of the billion dollar raise, with Spotify indicating that it will float on the stock exchange in the next two years.

Before raising the convertible debt, Spotify had more than $600 million left on its balance sheet, says the WSJ.

The money will allow Spotify to continue to aggressively take on rivals such as Apple Music, Google Play and the newly-launched SoundCloud Go, as well as funding global expansion and potential acquisitions.

Music Business Worldwide

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